In 1962, a mathematics professor walked into a Las Vegas casino with a system he had spent years developing.
Certainly not the first person to think they’d figured out a way to beat the house…
However, this gentlemen was unlike those who came before him….
His name was Ed Thorp and his system was card counting (a method for sizing your bets in blackjack based on what cards are left in the deck)
And he won, consistently.
To the point where casinos quite literally chased him out of town.
Then he wrote the book Beat the Dealer, which sold a million copies and forced casinos worldwide to change their rules.
But Thorp wasn’t done…
Because he took everything he'd learned about probability and edge, and applied it to financial markets.
His hedge fund, Princeton Newport Partners, generated 20% a year from 1968 to 1989. Almost 3x the returns of the S&P 500 over the same period.
He went through high inflation early 80s and the 1987 crash (the day the Dow fell 22% in a single session) without a significant dent.
And when the fund closed… over that 21-year period, he had only a handful of down months, and not a single down year.
His secret connects directly to something Warren Buffett has been saying in different ways for decades…
You see, Buffett has never had the best returns in any single year, five-year period or even ten-year period.
What he has had is above-average returns for sixty consecutive years. And the reason he's been able to do that is simple…
He never lost so much money in any given year that he was forced to quit.
That's the whole game…
Not winning the most in the good years while not losing so much in the bad ones that you tap out.
I mentioned on the webinar that there is a trader on X who posted P&L screenshots last year showing 188% returns using heavy leverage.
By March 5th this year, he'd already wiped out his account.
The math on avoiding catastrophic losses is more powerful than most people appreciate.
If your portfolio drops 50%, you need a 100% gain just to get back to where you started.
This is why proper hedging isn't optional for a serious long-term investor. It's the mechanism that keeps you in the game long enough for compounding to work.
The simplest version of this, even if you own a portfolio of individual stocks, you can hedge the whole thing using a put option on whichever major index your portfolio is most correlated to.
Meaning you get somewhere between 75-90% of the protection for a fraction of what it would cost to hedge each position individually. One position, one index, managed simply.
We walk through the installation of this inside the March 18th cohort of Options Cashflow Accelerator… including the specific hedging protocol that has outperformed the S&P by nearly 2 to 1 over 40 years while eliminating the catastrophic drawdowns that force people to quit.
Oliver
P.S.
Ed Thorp was still doing pull-ups at 91. I'll let you draw your own conclusions about what proper risk management does for your health.